Hospitality & Catering

Is Vegan & Plant-based here to stay?

In this article, we identify the impact and opportunities in the field of vegan and plant-based alternatives.

februari 5, 2020

With the growth of vegan and plant-based products entering the market, the global meat and dairy industry is facing tremendous amounts of disruption and competition. This is by far one of the most impactful trends for the food and beverage industry this decade. The Economist called 2019 ‘’the year of the vegan’’ and food delivery giant Uber Eats has predicted that plant-based will be its number one global trend. In 2018, about 16% of new food launches were vegan in the UK.At conceptional, we identify several reasons for this change. Firstly, consumers are becoming increasingly aware of health, environmental and ethical issues related to meat and dairy consumption. Secondly, both industry leaders and newcomers are expanding the span of plant-based alternatives through product innovation, and finally, we identify a strategical impact for industry players that need to address this undeniable change and find ways to conquer this new opportunity in the market. In this article, we will explore the impact of the plant-base rise on the food and beverage industry as well as the opportunities to bring solutions for the future.


Change in consumer behavior

The rise of health and animal welfare awareness combined with the undeniable urge to act upon global warming has been driving more people and brands to question the way we are eating and to embrace more sustainable diets, whether it is vegan, plant-based or flexitarian.


It can be unclear what the nuance is between plant-based and vegan diets. A plant-based diet indicates the consumption of products derived from plants, with few or no animal products. While a vegan diet is strictly excluding any animal products, including dairy, eggs, and honey. This difference is often misunderstood and can lead to confusion amongst consumers.


The impact of meat and dairy consumption has been widely covered in media, alongside the potential links between high red meat consumption and cancer. What used to be a fringe movement is now becoming mainstream. In the UK only, the vegan population has increased from 150k to more than 500k in less than a decade, according to the Vegan Society. The younger generations (millennials and generation Z) are driving this plant-based and vegan movement as they tend to be particularly sensitive to the issues around meat and dairy consumption. The global plant-based market is expected to reach $27 billion by 2030. according to  IDTechEx. 


Product innovation 

The growth in the vegan and plant-based market can also be explained by the effort placed in product innovation for meat substitutes, as the main obstacle to a diet change for consumers is the lack of similarity in taste and texture in those products.


Therefore, the high street is adapting with incredible speed and offering vegan options has become the new standard. We see major brands such as Pret a manger or Marks & Spencer introducing vegan ranges in their stores. In the fast-food market, brands have also developed meat alternatives to stay relevant amongst their converted audience. McDonald’s, after giving up plastic straws in its restaurants last year, has also launched its first Big Vegan in Germany. Fried chicken leader KFC developed a vegan burger in collaboration with Quorn, a UK based company that produces meat substitutes from mushrooms. Wagamama also started a new vegan menu while Guinness stopped using fish bladders in its brewing process to go vegan. Even major pizza brands like Pizza hut, Pizza Express, and Zizzi are now offering alternatives for vegans.


Simultaneously, new brands and concepts are coming into the market with an attractive vegan or plant-based offering. The incredible growth of oat milk brand Oatly speaks for itself, with a growth in its revenue from $1.5 million in 2017 to $15 million the next year. With a 25% decrease in milk consumption in the US between 1996 and 2016, we can wonder if producing cow milk is even necessary anymore.




Strategical impact 


Companies are facing several important strategic decisions for plant-based alternatives development. The disruption of small brands entering the market with innovative products is pushing established ones to react to protect their market share and capitalise on this growing market. There is a risk for companies who do not react to be left behind. In that sense, companies need to assess their capabilities and decide whether to grow their plant-based offering organically, if their positioning and brand image allow them to do so, or to grow through merge and acquisition. One other strategy can be for companies to invest in start-ups seeking investment to integrate them to the existing offering of the brand. Some examples of such investments are Unilever purchasing The Vegetarian Butcher in 2018, or Tyson Foods, US’s biggest meat producer that invested $34 million in plant-based meat alternative producer, Beyond Meat.


As the costs of the ingredients used to produce these non-meat alternatives are often higher than traditional animal proteins, it can be a challenging business model for companies to pursue and can result in higher prices. To tackle this issue, producers have looked into developing more direct to consumers models. These models provide valuable data on consumers preferences, which allows brands to offer a more tailored product. It also gives them the opportunity to communicate their brand story directly and enhance the loyalty towards their products. Through cutting on wholesaler and other intermediates, brands can obtain higher margins and eventually reduce the cost for consumers.


Marketing-wise, it can be tricky for brands to move away from the assumptions that vegan should be by essence healthier, while in reality, it often has more fat than non-vegan meals due to the use of highly concentrated fat elements such as nuts or avocados. Similarly, the growing demand for certain products has created social and environmental issues in the regions that cultivate it, especially in terms of water consumption. It takes an average of 2,000 litres of water to produce one kilo of avocados. As consumers are becoming increasingly aware of the potential negative environmental and health impact of certain plant-based products, brands are looking into a wider range of ingredients to broaden and improve the product range, both in terms of environmental impact and flavours.


The other side of the coin:

Simultaneously, we are noticing the development of a counter-trend to the vegan and plant-based movement. According to a study conducted by Wageningen University, Dutch people consumed 0.8% more meat in 2018 than the previous year. A surprising fact that can be explained by the development of a more urban lifestyle where consumers are moving away from the traditional 3 meals-a-day to a more spread out way of eating and thus, more eating moments that allow for more animal-based snacks.


As a counter effect of this no-meat/no-dairy movement, we can already testify the success of extremely non-veggie concepts, such as the incredible hype around Popeye’s chicken sandwich that went sold out after only two weeks. Or the rise of meat fanatics chefs like Angie Mar who runs the Beatrice Inn in New York, a restaurant famous for its hedonistic dining experiences. Another example of this meat-hype is barbecue master, award-winning entrepreneur, and bestselling author Jord Althuizen at Black Smoke, Rotterdam.


It is clear that the development of vegan restaurants will go hand in hand with an increase in meat-focused dining experiences, that will most likely result in more qualitative, unique ways of consuming animal proteins. A survey conducted by Mintel Meat-Free-Foods in 2018 reveals that 23% of consumers would be encouraged to eat more meat-free foods if there were more flavours to it, and 18% if those alternatives have the same texture as meat does. These numbers show that the effort placed in product development are driving the rise and sustainability of vegan and plant-based diets.


The vegan and plant-based market is still at a relatively early stage, and we expect it to continue growing. The reach of plant-based products will be enhanced in the coming years thanks to new product development, rising consumer demand and important level of investments. As the movement has been mostly observed in western markets so far, we can expect other areas of the world to be impacted by this considerations in the coming years, especially when the economical access is enhanced by product innovation, enhanced business models and the use of technology.


So is vegan & plant-based here to stay? At conceptional, our answer is yes, if it comes with tastier, healthier and more sustainable products to satisfy an increasingly aware and demanding audience. We are confident that the industry is evolving towards this, and the future will offer more exciting meat-alternatives options, thanks to existing brands reinventing themselves and to new concepts and innovations that will help us find new ways of eating.


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